While the cognac market had experienced a period of crisis in China, it seems that it finally sees the light at the end of the tunnel. In bars, boutiques, or online, the spirit’s market promises to experience bright new days in China in the years to come.
The Chinese market
While the United States are still the biggest consumer of cognac in the world, the Chinese market should not get any smaller. This drink is particularly appreciated in China because the meal occupies an important place in their culture. Feasts are organized for every great occasion and no meal worthy of the name can be celebrated without alcohol. Especially not in China! Its sales therefore explode unsurprisingly during the Chinese New Year period, celebrated between January 21 and February 19 each year. Much appreciated at the end of the meal, cognac is also a symbol of “French luxury”, which gives it a very good image.
That’s why a bottle of this beverage is also a very nice gift to offer in China, especially during the New Year or other celebrations like birthdays or weddings. Cognac is trendy! It is consumed in restaurants, bars and clubs. It is also often bought in bulk in nightclubs because the Chinese particularly like to show off their wealth by filling their tables of luxury spirits. For these reasons, the cognac market should have a bright future in China.
Luxury cognac is among the main “business gifts”
In 2013, when Xi Jinping was elected President of the People’s Republic of China, one of his first moves was the one of the battle against corruption. Indeed, this practice was widespread, especially after the death of Mao Zedong, when China had to undergo a deep transition to the market economy that it is today. Corruption was one of the biggest concerns of the population.
That is why the new President wanted to irradiate it, in order to maintain social stability in the country. Since this measure, the change has been considerable. But it also had some consequences for the luxury brands implanted in China. Indeed, grand cru bottles, luxury watches and luxury cognac were among the main “business gifts”. The brands have also developed specialized ranges with luxurious containers for this kind of purpose. After this reform, cognac sales fell by 12% and luxury watches’ ones by 11%.
Adapting to the market: the key to survival
After 3 years of crisis, market dynamics have improved. The efforts that large leading spirits groups have provided to re-adapt to the market have finally paid off. Indeed, by rethinking their strategy and not stopping investments in the Chinese market, brands such as Hennessy and Rémy Cointreau have survived on the market. Rémy Cointreau also decided to change its strategy and target its offer on a more affordable range, to fill the fall in sales of its most expensive bottles.
While the brand was offering Baccarat crystal mathusalems at 553,000 RMB, their new target is the upper middle class whom they offered more affordable bottles, such as the “Club” and the “1738 Royal Accord” (between 70$ and 100$). This stategy paid off and the brand is confident about the future of its market in the Middle Kingdom, which represents around 50% of its profits.
- Be on e-commerce sites: Chinese are big fans of e-commerce. Since they are very busy with their jobs, the delivery services are really fast and there is a greater choice online, ordering online saves time and money. More than 500,000 bottles of cognac were sold on Taobao last year.
- Be at the forefront of technology: Chinese are hyper connected and very open to all new technologies. When the Rémy Cointreau group launched in 2015 the first connected bottle of cognac in the world, the brand had everything to please the consumers of the Middle Kingdom. Chinese are used to entertainment, so you have to be inventive, creative and modern to seduce them.
- Have a community: No brand can make its way in China without being on WeChat. It is the most used app in China. It will allow you to develop a community as well as selling your products through its “mini-programs”.
- Change habits: The “organic” label is starting to get more and more popular in China, where food scandals are numerous. In addition, the fake alcohol remains very present in this country and counterfeits of big brands are not rare. The organic cognac market already exists but remains very small. It develops slowly because it is not easy to produce. However, this market could have a great potential in the future in China.
If you want to implement your cognac brand in China, feel free to contact Gentlemen Marketing Agency. Our Chinese market specialists will be able to offer you a digital marketing campaign according to your needs.
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